Franco-Nevada Chair Urges Gold Miners to Invest in Technology

The gold industry is in need of more high-quality deposits, Pierre Lassonde, chairman of Franco-Nevada (TSX:FNV,NYSE:FNV), told industry professionals at AME BC’s Mineral Exploration Roundup. He reminded them that fulfilling this need is their job and asserted that the industry is falling short because miners have not invested in new technology. He believes that challenging years lie ahead if companies continue along this path.

The message Lassonde delivered last week in Vancouver is not new. He has issued this call to action before, including at the Denver Gold Forum, an event he sees as one of the most important for the industry.

Perhaps miners will take this consistency as an indication of how critical Lassonde believes the situation to be. He insisted that miners’ lack of innovation is — and will continue to be — a major problem for the gold industry.

Lassonde did not shy away from using history to point out gold miners’ shortcomings. Recalling gold’s bull run in the 1970s, he said prices rose from $35 to $800. And though it took the industry seven years to respond, when it did, production more than doubled.

People debate why gold equities are so drastically underperforming bullion prices during this bull run, which has lasted for a decade. Exploration and development spending have soared, yet the industry lacks a discovery record that reflects these conditions.

Gold miners have spent enormous sums of money on low-quality projects. Cutoff grades in some cases are now as low as 1 gram per metric ton. “The next cutoff is dirt,” MINING.com quoted Lassonde as saying.

He also pointed out that many projects are in risky, undeveloped countries, which contributes to rising costs. Furthermore, moving projects to production once took about three to five years. It now takes 10 to 15 years, and Lassonde believes that time frame is eroding value.

Investors are fed up and Lassonde seems to empathize with them. He said that in the 1960s and 1970s, when gold was about $35 per ounce, $1 in exploration spending would yield $100 in return. Despite record gold prices during this bull run, over the last 10 years $1 in exploration spending has returned only $11.

“Investors are voting with their money. They are out of the deal,” he said during his presentation in Denver.

Lassonde placed much of the blame for the current state of affairs on the lack of new technology. To drive home his point, he compared the gold and oil industries, commenting on game-changing oil-related developments such as 3D seismic technology, fracking and horizontal drilling.

Responding to a question at last week’s Roundup, he said “[w]e’re nowhere. I mean give me a new technology that has really shaken our world in the last 30 years. I mean we’re still using the same stupid drill rigs that we’ve used for 100 years. Maybe they’re a little faster. The oil is better. But there’s nothing dramatically new.”

Challenging times lie ahead if the gold industry — especially senior companies — fails to invest in technology that will create a paradigm shift, Lassonde warned.

He is a firm believer that gold’s bull run is not over and could continue for another five to 10 years.

With gold demand sitting at $220 billion, growth is ten-fold higher than it was a decade ago, Lassonde pointed out. He questioned if any other industry can make such a claim. Furthermore, he projected that inflation and demand from India and China will drive further growth.

Cash is trash and central banks are realizing that all currency is suspect, he said. He foresees a growing trend of central bank gold purchases and he thinks money managers will return to a tendency of holding five to 10 percent of their portfolios in gold.

Not to mention that history appears to support Lassonde’s outlook for a longer bull run. He noted that over the past 200 years, the average bull market has been 21 years.

Another indicator Lassonde used in support of his argument for the longevity of this bull run is the Dow to gold ratio. Lassonde said that the top of every bull market has been met with a ratio of 1:1.

When he spoke at the Denver Gold Forum, he noted that the ratio was about eight to one. He said if he is correct about this relationship, that means gold will go to $13,000 over the next 10 years.

“I’m not so sure about one to one,” Lassonde said. “But two to one, I would bet a lot of money on that one.”

Securities Disclosure: I, Michelle Smith, do not hold equity interests in any companies mentioned in this article.

Two techonlogies awaiting development for the mining industry are flexible, coilable drill pipe used in the oild industry and even more of a game changer would be laser drilling as it has the potential to reduce drill cost by a factor of 5 or 10x. Downhole analyses using XRFand/or neutron scattering also have great potential. These could be game-changing technologies and these technologies already exist, they just need development for the mining industry.

With gas prices so cheap, my company >Advanced Drilling Technologies< has stacked 3 flexible coil tube rigs in texas. We are desperate to sell or deploy them. Let me know if you are interested jbsands@rosewd.com

Overview

INN's mission is to be the world's number one source of independent, unbiased news and education helping investors realized their financial goals. We also strive to be internationally respected for our integrity, our people and our commitment to excellence. Therefore, we are very concerned with the privacy rights of our audience and are committed to protecting the information collected about you.We have taken extensive measures to protect the confidentiality of your personal information and to protect your data from misuse and unauthorized access or disclosure. Unfortunately, no data transmission over the Internet can be guaranteed to be 100% secure. As a result, Dig Media cannot ensure or warrant the security of the information you transmit to us and you do so at your own risk.

Contact Information

Our postal address is

L200 - 560 Beatty Street,

Vancouver, BC V6B 2L3

We can be reached via e-mail at info@digmediasolutions.com or telephone at +1-604-688-8231

Information Collected

For each visitor to our website, our web server automatically recognizes no information regarding the domain or e-mail address.

We collect information volunteered by the visitor, such as survey information and/or site registrations, name and address, telephone number.

The information we collect is used to notify visitors about updates to our website, shared with other reputable organizations to help them contact visitors for marketing purposes.

With respect to cookies: When you visit our websites, we send one or more cookies, a small file containing a string of characters, to your computer that uniquely identifies your browser during your visit. We use these cookies to maintain your connection as you move from page to page, and to ensure anything you submit, such as a comment or a form, is not rejected. You can reset your browser to refuse all cookies or to indicate when a cookie is being sent. However, some website features or services may not function properly without cookies.

If you do not want to receive e-mail from us in the future, please let us know by sending us e-mail at the above address.

Persons who supply us with their telephone numbers on-line may receive telephone contact from us with information regarding new products and services or upcoming events. If you do not wish to receive such telephone calls, please let us know by sending us e-mail at the above address.

Ad Server

With respect to Ad Servers:

Other third-party companies which place advertising on our site may collect information about you when you view or click on their advertising through the use of their cookies or other tracking technologies, which may include delivering targeted advertisements and marketing messages based upon the third party websites that you visit, or other purposes. We cannot control this collection of information and are not responsible for the privacy policies and data collection, use and disclosure practices of these third party advertisers. You should contact these third party advertisers directly if you have any questions about their use of the information that they collect from you. Google-DoubleClick DFP is our third party ad server. If you would like to know more about their information gathering practices and opt-out procedures, please see Google ad policies.

Also, if you would like more information about this practice and to know your choices about not having this information used by these companies, please see NAI Opt-out Options.

Information Use

We only share personal information with other companies or individuals outside of the cases outlined above in the following limited circumstances:

We have your consent. We require opt-in consent for the sharing of any sensitive personal information.

We provide such information to our subsidiaries, affiliated companies or other trusted businesses or persons for the purpose of processing personal information on our behalf. We require that these parties agree to process such information based on our instructions and in compliance with this Privacy Policy and any other appropriate confidentiality and security measures.

We have a good faith belief that access, use, preservation or disclosure of such information is reasonably necessary to (a) satisfy any applicable law, regulation, legal process or enforceable governmental request, (b) enforce applicable Terms of Service, including investigation of potential violations thereof, (c) detect, prevent, or otherwise address fraud, security or technical issues, or (d) protect against harm to the rights, property or safety of Dig Media, its users or the public as required or permitted by law.

We may share with third parties certain pieces of aggregated, non-personal information, such as the number of users who searched for a particular term, for example, or how many users clicked on a particular advertisement. Such information does not identify you individually.

Remarketing

We may remarket your information. Remarketing is a way for us to connect with users, based upon your past interactions with INN websites. Third-party marketing vendors may be hired by INN to perform remarketing services. As a result, third-party vendors, including Google, may show INN ads on sites on the internet. Third-party vendors, including Google, use cookies to serve ads based on a user's prior visits to INN websites.

To opt out of customized Google Display Network ads click here. To find out more about how Google uses any data it collects please visit http://www.google.com/privacy_ads.html.
Any information collected is used only for remarketing purposes and will not be used by them for any other purpose.

Future Use

From time to time, we may use visitor information for new, unanticipated uses not previously disclosed in our privacy notice. If our information practices change at some time in the future we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Accessing Your Data

Please contact us at the address above for any additional questions about the management or use of personal data.

Upon request we provide site visitors with access to communications that the visitor has directed to our site (e.g., e-mails, customer inquiries), contact information (e.g., name, address, phone number) that we maintain about them.

Visitors can access this information by e-mailing us at the above address.

Upon request we offer visitors the ability to have inaccuracies corrected in contact information.

Visitors can have this information corrected by sending us e-mail at the above address.

Security

With respect to security: We have appropriate security measures in place in our physical facilities to protect against the loss, misuse or alteration of information that we have collected from you at our site.

Your Acceptance of These Terms

By using this site, or by submitting personal information to us, you signify your agreement to Dig Media's Privacy Policy and Terms of Use. From time to time we may change or update our piracy policies. It is your responsibility to check back regularly to inform yourself of such changes. Your continued use of this or any Dig Media website following the posting of changes to these terms will be deemed as your acceptance of those changes.

The foregoing policies are in effect as of August 1, 2012. Dig media reserves the right to change this policy statement at any time by posting the revised policy to this website. This statement and the policies outlined herein are not intended to and do not create any contractual or other legal rights in or on behalf of any party.

If you feel that this site is not following its stated information policy, you may contact us at the above addresses or phone number.